Select Medical Holdings Corporation
) fourth quarter earnings of 28 cents breezed past the Zacks
Consensus Estimate by 12%. Results also improved 12% year over
year from 25 cents earned in the year-ago quarter.
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SELECT MEDICAL (SEM): Free Stock Analysis
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Net income attributable to Select Medical Holdings Corporation
was $39.4 million in the reported quarter, up 6.9% year over
Quarterly Operational Update
Net operating revenues increased 3.2% year over year to $741.1
million in the fourth quarter. However, it remained below the
Zacks Consensus Estimate of $743 million.
Income from operations increased 9.4% year over year to $80.9
Total expenses in the quarter increased 2.4% year over year to
$660.2 million. The increase was driven by higher cost of
services (up 3.4% year over year), and general and administrative
expenses (up 10.8% year over year).
Adjusted earnings before interest tax, depreciation and
amortization (EBITDA) increased 5.3% year over year to $98.8
Quarterly Segment Update
segment reported net operating revenues of $556.0 million, up
4.1% year over year. Number of patient days increased 0.2% year
over year to 0.3 million. Number of admissions declined 0.2% year
over year to 13,743.
segment reported net operating revenues of $185.1 million, up
0.5% year over year. Number of clinics increased 2.6% year over
year to 979. Number of visits increased 3% year over year to 1.1
Full Year Highlights
Adjusted earnings were $1.07 per share exceeding the Zacks
Consensus Estimate of $1.05 per share. Results were up 27.4% year
over year from 84 cents reported in the year-ago period.
Including a loss on early retirement of debt net of tax worth
$3.8 million associated with the Sep 12, 2012 redemption of $275
million of the 7 5/8% senior subordinated notes, net income
attributable to Select Medical was $148.2 million, up 37.4% year
Net operating revenues for full year 2012 increased 5.2% year
over year to $2.9 billion.
Adjusted EBITDA in 2012 increased 5.2% year over year to $405.8
Share Repurchase Update
In 2012, Select Medical spent $46.8 million to repurchase 5.7
On Feb 20, 2013, management increased its $250 million share
buyback authorization to $350 million and extended the program
till Mar 31, 2014.
The company declared a special cash dividend of $1.50 per share,
totaling $210.9 million on Oct 30, 2012. It was paid on Dec 12,
2012 to the shareholders at the close of business on Dec 5, 2012.
On Feb 20, 2013, Select Medical entered into a credit extension
amendment to provide an additional $300 million to term loan
tranche (Series B Tranche B Term Loan). The company intends to
use the proceeds to redeem its outstanding 7 5/8% senior
subordinated notes due 2015, to fund the redemption of the senior
floating rate notes of Select Medical due 2015 and to partially
pay for the balance outstanding under Select's revolving credit
facility. The remaining will be paid on Feb 20, 2016.
Select and Select Medical also instructed U.S. Bank Trust
National Association to deliver a permanent redemption notice to
the holders of all of Select's outstanding 7 5/8% senior
subordinated notes due 2015 and all of Select Medical's
outstanding senior floating rate notes due 2015. All of
these will be redeemed at 100% of the principal amount plus any
accrued and unpaid interest to the redemption date on or about
Mar 22, 2013.
Select Medical exited 2012 with cash of $40.1 million, up 233.3%
year over year.
As of Dec 31, 2012, total assets of the company were $2.8
billion, down 0.4% year over year.
The long term debt of the company, as of Dec 31, 2012, was $1.5
billion, up 5.2% year over year.
Net cash flow from operating activities in 2012 was $298.7
million, up 37.6% year over year.
Shareholders' equity declined 11.9% year over year to $745.5
million at 2012 end. The debt to capital ratio of the company
increased 400 basis points year over year to 66%.
Select medical projects earnings per share in 2013 between 98
cents and $1.04 on net operating revenues of $2.95 billion-$3.05
The company also expects to deliver adjusted earnings before
interest, tax depreciation and amortization (EBITDA) in the range
of $400 million-$415 million.
It estimates effective tax rate at about 40% for 2013.
Performance of Few Other Property and casualty
Coventry Health Care Inc.
) reported fourth-quarter 2012 operating earnings per share of 88
cents, which surpassed the Zacks Consensus Estimate of 67 cents
as well as the prior-year earnings of 60 cents.
Molina Healthcare Inc.
) reported fourth-quarter 2012 net earnings per share of 54
cents, significantly surpassing the Zacks Consensus Estimate of
21 cents. Results were up 5.9% year over year from 51 cents
reported in the year-ago quarter.
U.S. health insurer, Aetna Inc.
) reported its fourth quarter 2012 earnings of 94 cents per share
a couple of pennies shy of the Zacks Consensus Estimate of 96
cents per share. Earnings also decreased 3% year over year.
Select Medical currently carries a Zacks Rank #4 (Sell).